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What is a Home Conversion Loan?

By
Parul Mahajan
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As per the needs of the customers, banks offer different kinds of home loans. One such loan is the Home Conversion Loan. In the simplest way, a home conversion loan refers to the transfer of your existing home loan package to another one, within the same bank.

Let me try to explain! You bought a home but then you found a new one that suits your needs in a better way. The problem is that you have already taken a loan for the house you are presently living in. No Worries! Banks today give you the option of transferring your existing loan and buying a new house.

How does Home Conversion Loan work?

The two major issues faced while buying a new house are; the loan obligations related to the old house and the money required to buy the new one. Keeping in mind these two issues, the banks and other financial institutions provide conversion loans through which you can easily tackle these two problems.

A home conversion loan transfers your existing loan to the new house and also provide you with the extra funds required. Under such a scheme, you are not required to pay off your previous loan. Also, the best part about this type of a loan is that you do not have to go through the entire process of applying for a loan all over again!

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Parul Mahajan
Parul Mahajan is a Post Graduate in Gender Studies from Ambedkar University, Delhi and also holds a Bachelor of Arts degree in English Literature from Daulat Ram College, Delhi University. She is the author of ““Warring Over Religion and Feminism”, a Masters level Dissertation. Parul has also interned with Vimochana, a Bangalore based women’s organization working on various women’s issues.

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4 COMMENTS

  1. When the situation is tough, the banks allow you to swap from one home loan to another. This is referred to as home conversion loan. The writer stuck with this idea and went ahead to express it wonderfully for readers to grasp it. The benefit of this is that you are given a new scheme of loan without having to go over the entire procedure of taking up loans.

  2. Does the home conversion loan really exist in India? I may sound like a pessimist but i have my doubts and that too with no extra cost. A typical Indian would never dream of changing the house in such circumstances only if his source of income increases. Usually the common scenario is to be burdened with so much paperwork and formalities that we give up the idea of loan conversion.

  3. In my opinion, a home conversion loan is a good thing because when one moves into a new home he may not like it for several reasons. Instead of going through the whole process of applying for a home loan once again ,which can take time , the home conversion loan steps in and makes things easier . The best part is that you don’t have to settle the old loan, it is just transferred.

  4. One of the most stressful periods of my life has been buying a new home. Not only deciding which house is right for me but later on also providing the bank with all necessary documentation for the loan. As that has been for me, one of the major milestones in last few decades it is good to hear that bank made some improvements in their offer regarding loans.

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